This video from Lockheed Martin explains the Space Fence.
(arronlee33)

(Newser)
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As the space shuttle program draws to a close, engineers are focusing on a less glamorous phenomenon of the space age: cosmic junk. The US Air Force is working on a $3.5 billion "Space Fence" scanner to track the estimated 500,000 pieces of space debris bigger than half-an-inch long that are believed to be in orbit, MSNBC reports. Just weeks ago, the crew of the International Space Station had to shelter in escape capsules as a chunk of space debris passed nearby.

The system currently in use can only keep track of a small portion of space debris, missing many objects capable of destroying a satellite. "This issue has always been on the minds of people who are trying to use space for all the things that it's used for today. We really are heavily reliant on space," says an exec at Lockheed Martin, which is competing with Raytheon for the Space Fence contract. The Air Force aims to have the system up and running by 2015.